Most of us, more likely than not, would be having some sort of life insurance policies. A term insurance plan, or a plain-vanilla risk protection cover, to be precise. And why not? After all, one wants to put in place some sort of income replacement mechanism for his near and dear ones in the event of his demise.
But, hey, here is a thought for you to ponder. That term assurance plan of yours pays the committed lump-sum figure to your nominee when you are no longer there, but if family circumstances warrant the money to be exhausted on more pressing needs over the not-too-distant future, then where does that leave your child and his future?
This is where children’s plans, or child plans as they are commonly called, come in. Thanks to its in-built component waiving off premiums upon the death of the life insured, a child plan makes sure that the educational requirements of the beneficiary (read, your child) would not be compromised even in case of your demise. Unlike regular insurance policies which lapse the moment the insured dies, children’s plans remain in force even if the policyholder (parent) is not alive–since the insurer pays out the remaining premiums on the deceased’s behalf.
What’s more, child plans provide additional benefits of investment (money back) by awarding the maturity benefit in multiple installments, which typically coincide with crucial milestones in a child’s life (such as his board exams, graduation and masters). And this benefit is paid out even if the parent passes away during the policy term.
Another USP of a child plan is the fact that the only beneficiary is the child, who is solely entitled to the benefit after a particular age.
Finally, one can structure a child plan to factor in extra expenses for events such as marriage, even though the principal objective remains to fund his education.
So if the idea of buying a child plan sounds appealing to you, then the Bajaj Allianz Child Gain plan is one policy you might like to look at.
This is a traditional (non unit-linked) child plan, with an in-built ‘Waiver of Premium’ component (as explained earlier). Note that this waiver clause also comes into play if the policyholder suffers from total permanent disability due to an accident during the Premium Payment Term (more on that a bit later). However, the benefit will cease to exist in case of accidental permanent total disability if the policy owner is more than 65 years old.
Another highlight of this scheme is a so-called monthly ‘Family Income Benefit’ under which the company will pay 1% of the Sum Assured–capped at Rs.10,000 per month–till the end of the policy term, provided the policyholder (aged less than 65) dies or contracts accidental total permanent disability during the policy tenure.
The Bajaj Allianz Child Gain child insurance plan comes in four variations–ChildGain 21, ChildGain 24, ChildGain 21 Plus and ChildGain 24 Plus–with the following common features (apart from the inbuilt benefits):
1. Limited Premium Payment Term – You have to pay premiums only till your child turns 18
2. The policy owner’s contributions grow through compounded annual bonuses, which will be awarded to the child during the first guaranteed payout (policy anniversary following age 18 of the kid), for policies that are in force. On top of annual bonuses, the company may decide to award a terminal bonus. Also read: Aviva Young Scholar child plan
For ChildGain 21 and ChildGain 21 Plus, the minimum guaranteed payouts are outlined below:
|Policy anniversary following completion of age||18||19||20||21|
|Benefit as % of Sum Assured||20%+ Accrued
For ChildGain 24 and ChildGain 24 Plus, the minimum guaranteed payouts are as follows:
|Policy anniversary following completion of age||18||20||22||24|
|Benefit as % of Sum Assured||25%+ Accrued
* refers to likely increase in payout based on higher interest during the payout period.
3. Option to buy additional insurance on maturity – The child can purchase a with-profits endowment or an equivalent policy from Bajaj Allianz for twice the amount of face value of the Child Gain plan, without having to undergo any medical tests, on the premium rates prevailing then.
4. The policy holder can claim tax relief under Section 88 and Section 10 (10 D) of the Income Tax Act.
5. Those going in for “ChildGain 21 Plus” or “ChildGain 24 Plus” schemes get an option to enhance their Sum Assured–not exceeding Rs. 10 lakh–by paying a nominal amount. This ‘Start of Life Benefit’ will be awarded to the child to help him begin his professional career without any hitches.
|Eligibility criteria||ChildGain 21 and
ChildGain 21 Plus
|ChildGain 24 and
ChildGain 24 Plus
|Age of the policy owner (in years)||20-50||20-50|
|Age of child (in years)||0-13||0-13|
|Maximum age of child at maturity||21||24|
|Premium Payment Term, or PPT (in years)||5-18||5-18|
|Maximum Policy term||21 less age at entry of LA (Child)||24 less age at entry of LA (Child)|
|Minimum Sum Assured||Rs. 1,00,000||Rs. 1,00,000|
|Maximum Sum Assured||Rs. 50,00,000||Rs. 50,00,000|
|Premium frequency||Annual, half-yearly or quarterly (Monthly option provided under salary deduction schemes)|
|Minimum Premium||Rs. 5,000 for annual mode; Rs. 2,500 for half-yearly option; Rs. 2,000 for quarterly mode and Rs. 700 for monthly mode|
For a PPT of between 7-18 years, those having paid three full years’ premiums can surrender the plan, while policy owners having premium payment terms of 5 and 6 years can abandon the policy if they have honoured their premium dues for two years.
In either case, a guaranteed minimum surrender value equaling 30% of all premiums paid–excluding the first year premium and the premiums for premium waiver benefit and Family Income benefit and additional benefit opted for–will be paid out.